Adelphia bonds seen better as creditors agree on plan; asbestos paper backs off

By Paul Deckelman and Sara Rosenberg

New York, Nov. 9 - Adelphia Communications Corp. bonds were being quoted higher Tuesday - some strongly so - on the news that the bankrupt Greenwood Village, Colo.-based cable operator's official unsecured creditors committee had agreed on a plan that would give them stock in return for their stakes and would value the company at $17 billion. However, individual market-watchers disagreed on whether it was able to hold those gains.

In bank debt dealings, Owens Corning surprised market players as its paper dropped by over a point during Tuesday's session - quite a change from the upward tear that the bankrupt Toledo, Ohio-based insulation maker and other asbestos-challenged names have been on ever since last Tuesday's elections.

Adelphia Communications bonds were seen generally bouncing around at higher levels, with a trader quoting the company's zero-coupon notes that were to have matured in 2003 at 98 bid, well up from 92.5.

He also saw Adelphia's 8 3/8% notes due 2017 hovering around 115, a full 10-point move up from recent levels.

However, a trader at another house dismissed the move, saying that while the company's bonds did in fact move up a couple of points during the session, the quotes he was seeing had them giving it all back, and then some, to go home actually lower.

He saw Adelphia's 10¼% notes due 2006 as having pushed up to 87 bid, 89 offered from prior levels at 85 bid, 87 offered - but then having come back down, to end at 84 bid, 86 offered. He quoted the Adelphia 10¼% notes due 2011 as having firmed to 91 bid, 93 offered from 89 bid, 91, but then surrendering those gains and finishing two points down on the day at 87 bid, 89 offered.

That having been said, the 8 7/8% bonds due 2007 of Adelphia's Century Communications Corp. unit were heard to have firmed to about 114 bid, up six or seven points, and then to have stayed there.

The company's official committee of unsecured creditors said Tuesday that it had reached a preliminary agreement among its members and other creditors on the terms of a plan for Adelphia to emerge from bankruptcy.

The committee said that under the terms of its plan - seen as coming into play should Adelphia not sell its assets off through the current auction process - unsecured creditors will receive stock in the reorganized company, which was given an estimated enterprise value of about $17 billion.

It said the plan also provides for continued litigation against the family of company founder and long-time chairman John Rigas. The Rigas clan essentially controlled Adelphia, holding much of the stock and occupying all of the senior management positions, until they were forced to resign by shareholders several years ago, and several were later prosecuted.

Adelphia - which is also engaged in the parallel track of trying to sell the company's assets to would-be buyers - said it welcomed the plan and would consider it.

Owens Corning loans lower

Elsewhere, Owens Corning's bank debt was seen lower, though on no specific news. Some bank debt market players speculated that it could just be settling after its rather impressive run up following the election.

The company's bank loan was quoted at 80.5 bid, 81.5 offered - down from 82 bid, 83 offered on Monday, according to a trader.

The company's bonds, such as its 7% notes due 2009, its 7½% notes due 2018 and 9 3/8% notes due 2012, were "down a little bit," one market-watcher said, quoting them at 65.75 bid, down 1½ points on the session.

Armstrong bonds higher

However, he saw bankrupt Lancaster, Pa.-based flooring maker Armstrong World Industries' 6.35% notes that were to have matured in 2003, its 7.45% notes due 2029 and 9% notes scheduled to come due in 2001 as having firmed another 2½ points on top of recent gains, to 72.5 bid.

Southfield, Mich.-based auto parts maker Federal Moguls' bonds were meantime at 30 bid, unchanged on the day.

In the several sessions immediately following the election, in which Republicans extended their control in the Senate and the House leading the market to believe that the legislative gridlock over an asbestos claims mechanism that would cap companies' liability might be settled sooner than later, the bonds and bank debt of companies facing big asbestos liabilities shot up. USG Corp.'s 8½% notes due 2005 and 9¼% 2001 notes, for instance, shot into the 120s from levels at least 10 or 12 points lower previously.

Owens Corning's bank debt headed higher by about four points in the election aftermath to 76.5 bid, 77.5 offered and continued to tick up from there on a regular basis over the past couple of days.

Delta dips after recent rise

Another name which has recently been on a tear has been Delta Air Lines Inc., which has been firming smartly over the past two weeks as the troubled Atlanta-based carrier, fighting to avoid bankruptcy, has made progress in cutting its labor costs and other overhead and in getting some debt holders to help it trim its massive debt load.

However, on Tuesday, a trader saw the company's 8.30% notes due 2029 losing a little altitude to 38.5 bid, 39.5 offered, down from 39.25 bid, 40.25 offered previously.

"That surprises me," he said, "especially with oil prices continuing to go down."

He chalked the retreat up to profit-taking, noting that "not very long ago, those bonds were trading around 25 or 26."

At another desk, Delta's 7.90% notes due 2009 were seen half a point lower at 50 bid, and its 7.70% notes due 2005 were pegged two points lower at 83.

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